Acquired Growth

By Timothy Denman

11/01/21

 

Acquisition and consolidation have become prevalent across the car wash landscape. While the industry remains fragmented with thousands of mom and pop’s battling it out for their piece of the pie, the mega chain is becoming more prominent and influential.

One of the well-appointed Wave Carwash Sites.
Wave Carwash features double pay stations
to increase throughput.
Free vacuum stations abound.
A recently acquired Rip Tide Car Wash site.
The tunnel exit.

It is not just industry stalwarts like Mister Car Wash, Zips, and Autobell that are dominating their local markets. New powerhouses, backed by private equity, are emerging, buying up the local competition and positioning themselves as major players at the national level. 

Magnolia Wash Holdings was formed a little over a year ago, fueled by investment from A&M Capital Opportunities, and already owns and operates 36 sites in the Southeast with additional expansion on the immediate horizon.

The company’s accelerated growth can trace its roots back to the combination of The Wave Carwash and Camel Premium Express Car Wash seven years ago. Owners Frank Bennett and Brooks Moye sold a majority stake to A&M in late 2020 forming Magnolia Wash Holdings, immediately acquiring the 10-site Oasis Express and bringing its wash total to 17. Following its founding, the company has been able to more than double its site total in less than a year with acquisition after acquisition.

“We formed the Magnolia brand as a holding company in November 2020,” says Magnolia vice president of operation Andy Agostini. “We brought on a leadership team, which consists of myself, our CFO Kyle Poyer, and Forrest Peters, who is vice president of development and integration.”

            Once the leadership team was in place, it went to work scaling the brand through strategic acquisition. “We are the nation’s 13th largest car wash operator with 36 sites,” says Agostini. “This is a huge achievement, but it also highlights the fragmentation in the industry.”

The southeastern express wash chain’s latest growth spurt came in early September when it closed on the acquisition of 16 locations spanned over four transactions. These deals, which were all executed on the same day, included the purchase of sites from RipTide Car Wash, Pirates Cove Car Wash, Whatta Wash, and Splash-N-Dash in the North Carolina, South Carolina, and Virginia markets.

These various sites will eventually be rebranded as Wave or Camel sites depending on location. The Wave and Camel washes are the primary brands under the Magnolia banner and maintain the customer-first approach Bennett and Moye instilled when they were launched years ago.

“We have nine brands under our umbrella,” says Poyer. “Three of which will be rebranded as Wave sites. Wave and Camel are our flagship brands and as we expand our footprint, we can offer our unlimited customers a greater selection throughout our markets with a unified brand approach.”

Building and nurturing a cohesive brand from disparate pieces requires more than just changing the name on the door, it requires a foundational realignment of both culture and operations.

According to Agostini there are three main challenges a growth-oriented enterprise must overcome if it hopes to build a cohesive organization from a collection of separate parts.

The first, is operational in nature. Every company does things slightly different, and Magnolia is hard at work integrating its playbook at the newly acquired locations. “We have decades of car wash experience across our field management team,” says Agostini. “We have spent a significant amount of time perfecting our playbook. As soon as we bring on a new brand the challenge becomes how do we integrate, how do we weave our way of doing things into the existing structure.”

The second hurdle to overcome is the human aspect. As the labor crisis rages on across the industry, building and retaining a high-performing staff is becoming increasingly difficult.

Factor in a major change in management, and keeping employees engaged and productive becomes increasingly difficult.

“We try to do everything we can to give back to our employees,” Agostini says. “Retention is a challenge in our industry, but we are doing whatever we can to build a positive work environment. The car wash industry is filled with stories of people that entered this business fresh out of high school thinking it was going to be a part-time job and now it’s a career for them. We want to give our associates that kind of opportunity. We want them to grow within the company.” 

Tightly linked to the staffing challenge is the cultural obstacle that must be overcome. Every company has its own unique culture, and Magnolia must instill its culture at every wash it acquires if it is going to build unity and cohesion. 

“We are not the type of company that will come in and expect immediate changes or begin slashing personnel,” says Agostini. “We are not a lead by fear business, we lead by example. Instilling a new culture can be a challenge, but the outcome has been very positive. We have had employees down to the associate level reach out and say how great thing have been since we took control.”

The final barrier Magnolia, or any company looking to build a unified brand from a collection of individual washes, must overcome is systemic. When you are dealing with a collection of POS systems and various wash equipment there are going to be challenges providing a consistent wash experience across locations as well as a unified data approach on the backend.

Magnolia’s equipment supplier of choice is Sonny’s. While it is operating various equipment options throughout the chain, Sonny’s is its go-to manufacturer for equipment retrofits as well as ground up builds — which Magnolia has in its pipeline and will be a major focus for 2022 and beyond. 

“By the end of this calendar year, we should have around 45 sites,” Poyer says of Magnolia’s continued expansion plans. “In our current pipeline we have about 56 sites in development, and another seven under construction right now. By next summer we’ll have 15 under construction.

“We just want to grow and become a benchmark of success within the industry. Whether that is 100, 200, or 300 sites, the sky’s the limit. We are very opportunistic when it comes to expansion. Our development pipeline will start to bear fruit in the next couple of months.”

Whether it is acquiring sites or developing from the ground-up, Magnolia has its foot on the gas when it comes to expansion. It has big plans but is also grounded in the understanding that car washing is not a cookie-cutter business, and what works in one community may not be successful in another. 

“Even though we are becoming a larger company, we still want to have that small town feel,” says Agostini. “One of the things that separates us from the competition is that customer journey. This is a hyper competitive market, and I think that is the one piece that a lot of car washes are missing.

They are hyper-focused on turning vehicles as quickly as possible. But we want to provide a cool experience for the customer, an experience that keeps them coming back.”

WASH PROFILE:

Magnolia Wash Holdings is now the 13th largest car wash
operator in the country.

Name: Magnolia Wash Holdings
Area of Operation: Southeast
Concept: Express Exterior
Primary Brands: The Wave
Carwash & Camel Premium
Express Car Wash
Key Board Members:
Frank Bennett & Brooks Moye
Number of Sites: 36
Preferred Equipment Supplier: Sonny’s
Employees: 500-plus



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